UK pay gap is set to fuel more strikes among government workers

UK public-sector workers are falling further behind their colleagues in the private sector when it comes to pay increases, a gap that is almost certain to escalate calls for strikes over the rising cost of living.

Basic pay growth in the private sector was 6 per cent in the 3 months through July, triple the 2 per cent for those on the government payroll. The difference was the largest ever reported by the Office for National Statistics outside of the height of the coronavirus pandemic.

“This is bound to feed into the pay claims of public-sector unions, whose strike threats - muted at the moment because of the period of Royal mourning - will no doubt return with renewed vigour shortly,” said Len Shackleton, editorial and research fellow at the Institute of Economic Affairs, a free-market think tank.

Few workers are managing to keep up with inflation, which is now above 10 per cent. The squeeze is being felt hardest by those on low incomes and millions of workers across the public sector.

The frustration has led to the most active run of industrial action since the early 1970s, hitting services from trains to garbage collection and even courts over the summer. Meanwhile, school teachers and hospital staff are threatening to take action in an effort to persuade the government to increase its pay offer.

The Bank of England looks at overall pay growth, which is running at over 5 per cent - well above the pre-pandemic average of around 3 per cent. Policy makers are expected to raise interest rates by least 50 basis points on Sep 22 to stop a wage-price spiral taking hold, with investors pricing in a doubling of the cost of borrowing by mid-2023.

Planned train and postal strikes were suspended as a mark of respect following the death of Queen Elizabeth II. The Trades Union Congress also postponed its annual gathering of member labour organisations until Oct. 18. BLOOMBERG